* Zinc mine offers potential synergies
* Metal driven high by China, shortage
* Lima stock exchange suspends trade in Volcan (Adds background, analyst's comment, halt to Volcan share trading)
By Noor Zainab Hussain and Barbara Lewis
Oct 3 (Reuters) - Miner and commodities trader Glencore has agreed to buy a further stake worth at least $531 million in Peru's largest zinc miner, Volcan Compañia Minera SAA , the company said on Tuesday.
Glencore, which has been a shareholder in Volcan since 2004 and holds a 7.68 economic interest, said it was buying at least 26.73 percent of the voting shares.
The price of zinc hit 10-year highs for a second day on Tuesday as worries over production outages in China pushed up prices.
The Lima stock exchange suspended trade in Volcan's shares following the deal. Glencore's London-listed shares closed up 0.8 percent at 354.15 pence.
"Volcan's operations are located in the richest polymetallic production area in Peru, producing some of the highest quality zinc concentrates," Glencore said in a statement.
"The transaction will provide an increase and extension of Glencore's zinc production profile and the opportunity for synergies with Glencore's existing Peruvian zinc operations."
Following the purchase, which will be implemented under Peruvian law via a tender offer for up to 48.19 percent of Volcan's class A common shares, Glencore will have an economic interest in Volcan of between 18.98 percent and 28.07 percent, the company said.
The total consideration payable by Glencore would be between $531 million and $956 million, depending on the level of acceptances. It would be paid out of existing cash resources and should be completed this year.
Glencore has said it is focusing on strategic acquisitions, especially near existing resources, which will create synergies.
Although the mining industry has recovered from the commodity price crash of 2015-16 the mood remains cautious and Glencore said its deal-making would limit its levels of debt to ensure an investment grade credit rating.
"Glencore clearly sees opportunities for value add from the reasonably-sized operation, which is running at a circa 250,000 tonne per annum rate," Hunter Hillcoat, analyst at Investec, said of Tuesday's zinc deal.
Earlier this year Glencore entered a bidding war to buy Rio Tinto's coal interests in Hunter Valley, Australia, next to its own operations but ended up buying a 49 percent stake in the business after Rio agreed to sell to China's Yancoal instead. (Additional reporting by Zandi Shabalala in Lonndon; Editing by Greg Mahlich)